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Yields on TIPS are now negative on the 5-yr and 10-yr inflation-indexed note, reflecting the...

  • Thursday, August 18, 2011, 10:43 AM ET
    Yields on TIPS are now negative on the 5-yr and 10-yr inflation-indexed note, reflecting the expectation of investors that inflation will barely scratch 2% for the foreseeable future. A negative yield for new buyers implies they won't be able to match CPI on their investment, negating the effectiveness of the inflation hedge.
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    You are soo wrong. A negative long TIPS yield means that investors are so convinced that inflation will be huge in the next 5-10 years that they dont care at all about the yield, but about protecting their investments. It also means that there is a lot of people that still trust US consumer inflation statistics, and finally it means that they have no trust at all to put their savings in the commercial zobie banking system. Finally it means that they do not trust in precious metals because they do not have access to them or becasue they think it will be confistated again.
    18 Aug 2011, 11:00 AM Reply Like
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